Economy

CARACAS (Reuters) – Venezuela’s release of 30 U.S. and domestic prisoners in exchange for freedom for a key ally of President Nicolas Maduro represents an opportunity for Maduro to bolster his political strength ahead of elections next year, analysts said.Businessman Alex Saab was granted clemency by U.S. President Joe Biden and sent back to Venezuela on Wednesday in exchange for the releases.U.S. prosecutors had accused Saab of siphoning off some $350 million from Venezuela via the United States in a scheme that involved bribing Venezuelan government officials.Saab, who denies wrongdoing, had been held in federal jail in Miami awaiting trial since October 2021.His triumphant return to Caracas – greeted on the airport tarmac by Maduro’s wife and then received at the presidential palace by Maduro himself – could help the president shore up domestic support.”It is a demonstration of (Maduro’s) willingness not to abandon his own,” said Luis Vicente Leon, director of Caracas consultancy Datanalisis. “He’s telling the members of his party that he is willing to do everything, even be left without resources, to defend them.”At the time of his arrest in 2020, Saab, a Colombian businessman, had been designated a diplomat by Maduro to negotiate shipments of fuel and humanitarian aid from Iran.Upon his return to Caracas he thanked the government for not abandoning him, saying Maduro’s administration would never surrender.The White House had been pressuring Caracas in recent weeks to fulfill its side of a deal, in which Washington provided relief from sanctions in return for an agreement by Maduro to hold free elections in 2024 and release those the U.S. said were being unfairly held in Venezuelan jails. Maduro said Wednesday’s swap was a partial compliance with that accord and marked a step toward a new era of diplomatic relations with the United States.Already, the government’s coffers had been on track to benefit from the sanctions relief. The government has predicted it will get 27% more income from state-run oil company PDVSA next year, likely allowing it to increase social spending ahead of the 2024 vote.Critics said the swap would further embolden Maduro and weaken Washington’s position.”(Saab’s) release deals a heavy blow to U.S. credibility in the fight against corruption, particularly in Latin America,” Marshall Billingslea, a former assistant secretary of the U.S. Treasury under President Donald Trump, said on social media. “It sends a disastrous signal to partner nations who cooperated with us, believing Saab would face justice … it is a ‘gut-punch’ to the Venezuelan opposition,” he added.A U.S. official defended the move, saying President Joe Biden faced a tough choice.”In order to make this exchange, the president had to make the extremely difficult decision to offer something that the Venezuelan counterparts have actively sought,” the official said, requesting anonymity to speak freely. “The president made what was a difficult choice but the right choice.”Biden told journalists in Wisconsin that Maduro was so far upholding his end of the deal but that there was a long road ahead. ELECTIONS AHEADThough some well-known opposition figures were among those who could be or had been released, there is still much that remains unclear about Maduro’s compliance with other parts of the election deal.Three people involved with the campaign of opposition presidential candidate Maria Corina Machado are expected to have arrest orders withdrawn, sources have said. Machado’s campaign declined to comment.The recently-detained Roberto Abdul, who was involved with the organization of the opposition’s October primary, has also been freed, a rights organization said. But progress is still needed toward rescinding public office bans against some in the opposition, including Machado, announcing an election date, and other guarantees, said analysts.”We’ll have to see if it’s just a prisoner exchange or if it means a path to free and fair elections,” said Oswaldo Ramirez of Caracas’ OCR Consultores. More

WASHINGTON (Reuters) -A U.S. government watchdog said Transportation Secretary Pete Buttigieg’s use of government airplanes on eight trips complied with all federal rules.The Transportation Department Office of Inspector General (OIG) review released on Wednesday also found that flights made by his predecessor, Elaine Chao, on Federal Aviation Administration-operated (FAA) planes also complied with federal requirements.The report said the department “complied with federal regulations, policies, and procedures regarding official travel by the secretaries on DOT aircraft from January 2017 to June 2023.”Buttigieg’s eight trips included 22 flight legs on department jets which accounted for 11.6% of his official trips through June 30, while Chao’s accounted for 7.3%. A spokesperson for Chao declined to comment.The FAA operates a fleet of 38 airplanes for aviation safety training; flight inspection; research, development, test and evaluation support; and critical event response.Buttigieg said in September that he had taken 600 total airline flights since taking office.A spokesperson for Buttigieg said that the U.S. Transportation secretary had “directed that travel and logistical decisions be grounded in efficient and responsible use of taxpayer dollars.” The OIG report said Buttigieg most recently used government planes for a Mexico City trip in June to meet with the Mexican president and in September 2022 to attend meetings of the International Civil Aviation Organization in Montreal. The Department of Transportation had cited security and communication needs for both trips.Buttigieg’s government flights cost about $59,000 in total, while Chao’s flights cost $98,508, including $70,000 for a 2017 trip to the Paris air show. The report added there were no instances of non-federal officials onboard DOT aircraft during the Transportation secretaries’ official travel.The spokesperson added: “the majority of times the FAA aircraft was used actually saved taxpayers money, including in instances that were required for exceptional scheduling needs.”A 1992 White House memo allows senior government officials to travel on government aircraft, but with restrictions. The review, launched in February, had been sought by Republican Senator Marco Rubio, who had asked if there had been any violations of Transportation Department policy. More

Buying mattresses, clothes and other goods on installment plans has propped up spending, but economists worry that such loans could put some people at risk.“Buy now, pay later” loans are helping to fuel a record-setting holiday shopping season. Economists worry they could also be masking and exacerbating cracks in Americans’ financial well-being.The loans, which allow consumers to pay for purchases in installments, often interest-free, have soared in popularity because of high prices and interest rates. Retailers have used them to attract customers and to get people to spend more.But such loans may be encouraging younger and lower-income Americans to take on too much debt, according to consumer groups and some lawmakers. And because such loans aren’t routinely reported to credit bureaus or captured in public data, they could also represent a hidden source of risk to the financial system.“The more I dig into it, the more concerned I am,” said Tim Quinlan, a Wells Fargo economist who recently published a report that described pay-later loans as “phantom debt.”Traditional measures of consumer credit indicate that U.S. household finances overall are relatively healthy. But, Mr. Quinlan said, “if those are missing the fastest-growing piece of the market, then those reassurances aren’t worth a darn.”Estimates of the size of this market vary widely. Mr. Quinlan thinks that spending through pay-later options was about $46 billion this year. That is small when compared with the more than $3 trillion that Americans put on their credit cards last year.But such loans — offered by companies like Klarna, Affirm, Afterpay and PayPal — have climbed fast at a moment when the finances of some Americans are showing early signs of strain.Credit card borrowing is at a record high in dollar terms — though not as a share of income — and delinquencies, though low by historical standards, are rising. That stress is especially evident among younger adults.People in their 20s and 30s are by far the biggest users of pay-later loans, according to the Federal Reserve Bank of New York. That could be both a sign of financial problems — young people may be using pay-later loans after maxing out credit cards — and a cause of it by encouraging them to spend excessively.Liz Cisneros, a 23-year-old college student in Chicago who works part time at Home Depot, said she was surprised by the ease of pay-later programs. During the pandemic, she saw influencers on TikTok promoting the loans, and a friend said they helped her buy designer shoes.Ms. Cisneros started using them to buy clothes, shoes and Sephora beauty products. She often had multiple loans at a time. She realized she was overspending when she didn’t have enough money while in a grocery checkout line. A pay-later company had withdrawn funds from her bank account that morning, and she had lost track of her payment schedule.“It’s easy when you keep continually clicking and clicking and clicking, and then it’s not,” she said, referring to when she realizes she has spent too much.Ms. Cisneros said the problem was particularly intense around Christmas, and this year she was not shopping for the holiday so she could pay off her debts.Pay-later loans became available in the United States years ago, but they took off during the pandemic when online shopping surged.The products are somewhat similar to the layaway programs offered decades earlier by retailers. Online shoppers can choose from pay-later options at checkout or on the apps of pay-later companies. The loans are also available at some physical stores; Affirm said on Tuesday that it had started offering pay-later loans at the self-checkout counters at Walmart stores.The most common loans require buyers to pay a quarter of the purchase price upfront with the rest usually paid in three installments over six weeks. Such loans are typically interest-free, though users sometimes end up owing fees. Pay-later companies make most of their money by charging fees to retailers.Some lenders also offer interest-bearing loans with repayment terms that can last a few months to more than a year. Pay-later companies say their products are better for borrowers than credit cards or payday loans. They say that by offering shorter loans, they can better assess borrowers’ ability to repay.“We’re able to identify and extend credit to consumers who have the ability and willingness to repay above that of revolving credit accounts,” Michael Linford, Affirm’s chief financial officer, said in an interview.In its most recent quarter, 2.4 percent of Affirm’s loans were delinquent by 30 days or longer, down from 2.7 percent a year earlier. Those numbers exclude its four-payment loans.Briana Gordley, who works on consumer finance issues for a progressive policy organization, learned about pay-later firms in college from friends, and still uses them occasionally for larger purchases.Montinique Monroe for The New York TimesThe service makes the most sense for certain purchases, like buying an expensive sweater that will last many years, said the chief executive of Klarna, Sebastian Siemiatkowski.He said pay later probably made less sense for more frequent purchases like groceries, though Klarna and other companies do make their loans available at some grocery stores.Mr. Siemiatkowski acknowledged that people could misuse his company’s loans.“Obviously it’s still credit, and so you’re going to find a subset of individuals who unfortunately are using it in not the way intended,” said Mr. Siemiatkowski, who founded Klarna in 2005. He said the company tried to identify those users and deny them loans or impose stricter terms on them.Klarna, which is based in Stockholm, says its global default rates are less than 1 percent. In the United States, more than a third of customers repay loans early.Kelsey Greco made her first pay-later purchase about four years ago to buy a mattress. Paying $1,200 in cash would have been difficult, and putting the purchase on a credit card seemed unwise. So she got a 12-month, interest-free loan from Affirm.Since then, Ms. Greco, 30, has used Affirm regularly, including for a Dyson hair tool and car brakes. Some of the loans charged interest, but she said that even then she preferred this form of borrowing because it was clear how much she would pay and when.“With a credit card, you can swipe it all day long and be like, ‘Wait, what did I just get myself into?’” Ms. Greco, a Denver resident, said. “Whereas with Affirm, it’s giving you these clear-cut numbers where you can see, ‘OK, this makes sense’ or ‘This doesn’t make sense.’”Ms. Greco, who was introduced to The New York Times by Affirm, said pay-later loans helped her avoid credit card debt, with which she previously had trouble.But not all consumers use pay-later options carefully. A report from the Consumer Finance Protection Bureau this year found that nearly 43 percent of pay-later users had overdrawn a bank account in the previous 12 months, compared with 17 percent of nonusers. “This is just a more vulnerable portion of the population,” said Ed deHaan, a researcher at Stanford University.In a paper published last year, Mr. deHaan and three other scholars found that within a month of first using pay-later loans, people became more likely to experience overdrafts and to start accruing credit card late fees.Financial advisers who work with low-income Americans say more clients are using pay-later loans.Barbara L. Martinez, a financial counselor in Chicago who works at Heartland Alliance, a nonprofit group, said many of her clients used cash advances to cover pay-later loans. When paychecks arrive, they don’t have enough to cover bills, forcing them to turn to more pay-later loans.“It is not that the product is bad,” she added, but “it can get out of control really fast and cause a lot of damage that could be prevented.”Barbara L. Martinez, a financial counselor in Chicago who works with low-income families, meeting with a colleague about an upcoming workshop for people wanting to learn more about financial stability.Jamie Kelter Davis for The New York TimesBriana Gordley learned about pay-later products in college. She was working part time and couldn’t get approved for a credit card, but pay-later providers were eager to extend her credit. She started falling behind when her work hours were reduced. Eventually, family and friends helped her repay the debts.Ms. Gordley, who testified about her experience last year in a listening session hosted by the Senate, now works on consumer finance issues for Texas Appleseed, a progressive policy organization. She said pay-later loans could be an important source of credit for communities that lacked access to traditional loans. She still uses them occasionally for larger purchases.But she said companies and regulators needed to make sure that borrowers could afford the debt they were taking on. “If we’re going to create these products and build out these systems for people, we also just have to have some checks and balances in place.”The Truth in Lending Act of 1968 requires credit card companies and other lenders to disclose interest rates and fees and provides borrowers with various protections, including the ability to dispute charges. But the act applies only to loans with more than four payment installments, effectively excluding many pay-later loans.Many such loans also aren’t reported to credit agencies. As a result, consumers could have multiple loans with Klarna, Afterpay and Affirm without the companies knowing about the other debts.“It’s a huge blind spot right now, and we all know that,” said Liz Pagel, a senior vice president at TransUnion who oversees the company’s consumer lending business.TransUnion and other major credit bureaus and pay-later companies all say they are supportive of more reporting.But there are practical hurdles. The credit-rating system rates borrowers more highly for having longer-term loans, including longstanding credit card accounts. Each pay-later purchase qualifies as a separate loan. As a result, those loans could lower the scores of borrowers even if they repay them on time.Ms. Pagel said TransUnion had created a new reporting system for the loans. Other credit bureaus, such as Experian and Equifax, are doing the same.Pay-later firms say they are reporting certain loans, particularly ones with longer terms. But most are not reporting and won’t commit to reporting loans with just four payments.That worries economists who say they are particularly concerned about how such loans will play out when the economy weakens and workers start losing their jobs.Marco di Maggio, a Harvard Business School professor who has studied pay-later products, said that when times were tough more people would use such loans for smaller expenses and get into trouble. “You only need one more shock to push people into default.” More

The new contract would provide raises and better benefits, following similar deals at other big airlines.Southwest Airlines and its pilots union have reached a tentative deal on a new, five-year labor contract that would raise wages 50 percent over the next several years and increase retirement benefits.The union’s board unanimously approved the deal, which it said was worth $12 billion, on Wednesday, sending it to the more than 11,000 union members, who have until Jan. 22 to cast a vote.The deal would provide benefits that are similar to those secured by pilots unions at the three other large U.S. airlines in separate negotiations this year. Pilots have had the upper hand in labor talks because they are in high demand amid the strong recovery in air travel after a steep decline in the early part of the pandemic.Capt. Casey Murray, the president of the union, the Southwest Airlines Pilots Association, said that the airline had started to lag behind its peers in attracting and keeping pilots in recent years. “What this contract was about was closing that gap so that we could recruit and retain competitively,” he said in an interview.Southwest welcomed the deal. In a statement, Adam Carlisle, vice president of labor relations for the company, said that the agreement would deliver “industry-leading” pay rates.Relations between Southwest and the union have been contentious at times. In 2021, the union sued the airline over changes made by management during the pandemic. Last year, the company and union entered federal mediation over contract talks. In May, Southwest’s pilots voted to approve a strike for the first time in the company’s history, according to the union, though federal law prohibits pilots from walking off the job without first pursuing mediation and other steps.Other pilots unions have achieved big gains. In March, pilots at Delta Air Lines approved a contract that would boost wages 34 percent over several years. Pilots at American Airlines this summer approved a contract that grants them a 46 percent raise, and pilots at United Airlines approved a 40 percent pay increase.All three contracts included improvements to vacation and retirement benefits and greater protections against last-minute reassignments. Southwest’s deal will include similar improvements. The new contracts at the big airlines have also increased pressure on smaller carriers to improve pay and benefits to keep pilots from leaving for larger employers.Pilots at big airlines easily earn six-figure salaries. The most senior pilots, who typically fly larger planes on longer routes, can earn several hundred thousand dollars a year. Labor and fuel account for about half of airlines’ operating expenses. In recent months, airline executives have warned that such costs could push down their profits.If approved, the new Southwest deal would extend through December 2028. The contracts at Delta, American and United are all in effect through at least 2026.There is no guarantee that Southwest’s pilots will approve the deal. The airline’s flight attendants rejected a deal this month, sending negotiators back to the table. Flight attendants at American and United are also negotiating new contracts. More

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This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.UK Prime Minister Rishi Sunak received some much-needed good news this morning as official data showed inflation falling more than expected, triggering expectations of an interest rate cut in the spring, albeit balanced elsewhere with more warnings about the fragility of the economy and the lingering damage from Brexit.Inflation fell from 4.6 per cent to 3.9 per cent in November, dragged down by fuel and food prices, to hit its lowest level since September 2021. The core measure, excluding those volatile items, also fell from 5.7 per cent to 5.1 per cent. The data prompted a fall in the pound and a rise in UK stocks. Markets are now pricing in a quarter-point rate cut in May. The Bank of England voted earlier this month to keep rates unchanged at 5.25 per cent over concerns that UK inflation was proving more stubborn than expected and higher than in the US and the eurozone.Although this morning’s data will give some relief to the prime minister, who has made halving inflation by the end of the year one of his five core promises to voters, it comes after a torrid few days of bad news. Yesterday, he was reprimanded by the UK statistics watchdog for erroneously claiming that “debt is falling” — another of his pledges. Also yesterday, Pimco, one of the world’s biggest active bond fund managers, said the UK was at high risk of a serious economic downturn next year. A new post-Brexit assessment of trading conditions meanwhile has highlighted the mounting costs facing British businesses that export to the EU. The British Chambers of Commerce said companies were mired in so much red tape from new EU rules that it was easier to trade with more distant countries and that upcoming changes would have “big repercussions” that the government could not ignore if it wanted to deliver economic growth. On the plus side, the government has at least reached a post-Brexit financial services deal with Switzerland.Economic challenges aside, Sunak’s political problems continue to mount. Junior doctors in England and Wales today began another three days of strike action (affecting one of Sunak’s other pledges to cut hospital waiting lists) while it was confirmed that his government would face yet another difficult parliamentary by-election after voters signed a petition to remove Conservative MP Peter Bone. English councils are also in uproar, arguing that a new funding offer from central government means they will have to raise taxes and cut essential services to avoid bankruptcy.However, the biggest problem for Sunak ahead of next year’s general election, argues Inside Politics writer Stephen Bush, is that the prime minister has gambled and lost on his “five pledges” strategy, and is likely to meet just one of them. His party, Bush suggests, will now switch to Plan B: attacking the Labour opposition’s spending plans.This is the last Disrupted Times until the new year. The next edition will be in your inbox on Wednesday January 3. Season’s greetings to all our subscribers.Need to know: UK and Europe economyDanish offshore developer Ørsted is to press ahead with the world’s largest offshore wind farm off the British coast, in a boost for the sector after setbacks this year.UK house prices fell at the fastest rate in more than a decade in the 12 months to October, according to official statistics that revealed the impact of high interest rates on the property market. The average house price now stands at £288,000, down £3,000 from a year ago.Germany moved to seize more than €720mn in the Frankfurt bank account of a Russian financial institution under sanctions, potentially marking a big step-up in international efforts to enforce anti-Russian sanctions. Here’s our explainer on the legal case for seizing Russian assets.German chancellor Olaf Scholz is facing questions over his term as Hamburg mayor when the city wrote off the debts of MM Warburg, one of the country’s oldest private banks. Scholz is already grappling with coalition infighting, low public support and a worsening economy.The EU reached agreement on long-delayed plans to overhaul its asylum and migration rules. Here’s our Big Read on how migration is pushing Europe to the right. Need to know: global economyA US-led military coalition and shipowners are trying to establish a safe corridor for commercial shipping as vessels start to divert around Africa to avoid attacks by Iranian-backed militia. AP Møller-Maersk, operator of the world’s second-largest container shipping fleet, said ships due to sail through the Red Sea would be rerouted via the Cape of Good Hope. The FT editorial board said the situation highlighted the need for resilience in core supply routes.The Bank of Japan said it would stick with negative interest rates and was in no rush to change policy before the US Federal Reserve considers cutting rates next year. Here’s our recent Big Read on the government’s attempts to get Japan’s legendary savers to switch into investment.US consumer confidence hit a five-month high in December as optimism about the economy grew and concerns over a potential recession abated. Strategist Rebecca Patterson says the key factors that will determine progress next year are consumer demand, the state of the labour market, commodities and Chinese deflation. Talking of 2024, here’s FT Money’s investment outlook and (for Premium subscribers) here’s Unhedged’s five things to watch in markets.The latest FT film looks at South Africa’s state power company Eskom and its struggles to end blackouts that have severely damaged the economy while battling a legacy of neglect, mismanagement and state capture.Video: Eskom: how corruption and crime turned the lights off in South Africa | FT FilmNeed to know: businessSpain said it would buy up to 10 per cent of shares in telecoms group Telefónica, a national champion with businesses in security and defence. It has been targeted by STC — majority-owned by Saudi Arabia’s sovereign wealth fund — as the group seeks to expand its investments in Europe.Eurozone banks should brace for funding sources to become “more volatile” next year, the European Central Bank warned.Nippon’s $14.9bn bid for US Steel is Japan’s largest overseas acquisition this year and would make the combined group the world’s third-biggest steel producer. The deal signals that the country’s cash-rich corporations are resuming their role as some of the world’s hungriest strategic buyers. Copper is set to be the best-performing industrial metal of the year as a string of production disruptions squeezes supplies of the commodity used in everything from power lines to cars. X is diving into political advertising as it tries to fill gaps caused by big commercial brands leaving the social media platform. Meta has been accused of being too heavy-handed in its moderation of social media content on the Israel-Hamas conflict.Xvideos, Pornhub and Stripchat, three of the world’s biggest pornography sites, will be hit by new EU laws on online content, including stricter requirements on age verification.If you’re in the US and thinking of getting the latest Apple Watch, you’d better get your skates on.The FT Person of the Year is also DT’s Disrupter of the Year: Novo Nordisk chief Lars Fruergaard Jørgensen. His company (now the most valuable in Europe) and its obesity treatments are set to have a profound impact not just on healthcare, but on societies, public finances and our relationship with food. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The world of workWhat’s the best way to enjoy your retirement? Get some tips from the new Working It podcast. Grilling bison, a dip in the north Atlantic or just a few hours with Peppa Pig and the kids — here’s what chief executives get up to at Christmas.Some good newsTurns out 2023 wasn’t all bad after all. Here’s a list from Positive News of what went right in the past 12 months, from a clear pathway emerging to ending Aids to a tipping point on renewable energy.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. Please share your feedback with us at [email protected] and we’ll see you again on Wednesday January 3 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.EU finance ministers have bowed to German pressure for tough debt-reduction rules, as part of a deal to phase in a sweeping overhaul of the union’s budget framework.After months of haggling, the package gives EU member states greater independence on agreeing debt and deficit plans with Brussels, but only within tight spending limits demanded by fiscal hawks.Although high-debt states were given some extra wriggle room as part of a transition period, the new framework included stricter overall limits on spending that were crucial to winning over Germany, which was deeply sceptical about the original reforms. The political deal, struck after marathon negotiations between capitals, must still be agreed with the European parliament to become law. Sigrid Kaag, the Dutch finance minister, said the deal would ensure “ambitious and sustainable debt reduction” in Europe. “This agreement provides for fiscal rules that encourage reforms, with room for investments and tailored to the specific situation of the member state in question.”Enforcement of the EU rules, known as the Stability and Growth Pact, had been suspended at the onset of the Covid-19 pandemic but are set to apply again from next year, adding pressure on ministers to come to an agreement.EU countries are saddled with high debt and struggle to bring down spending after costly lockdowns and an energy crisis sparked by Russia’s full-scale invasion of Ukraine.  Eurozone debt, while declining, remains historically high at around 90 per cent of gross domestic product, and the ratio in six countries — Greece, Italy, France, Spain, Portugal and Belgium — is in excess of 100 per cent.Ministers had decided the old rules, too strict and seldom enforced, were out of step with the new high-debt reality and needed to be reformed.The compromise agreed between EU member states built on original proposals from the European Commission, which sought to give countries more independence in setting debt reduction plans.Under the framework, the commission will draw up national spending plans over four years ensuring debt is put on a declining path. Countries can extend these up to seven years by committing to growth-enhancing reforms. Two fiscal benchmarks, which are included in EU treaties, remain unchanged: a 60 per cent debt-to-GDP ratio and a 3 per cent annual deficits limit. Ministers agreed to ditch a separate requirement to cut excess debt by 5 per cent per year.To improve enforcement, the ministers decided to introduce a yearly spending cap that will become main benchmark used to assess a country’s compliance with its fiscal plan.These plans will be flanked by two “safeguards” added at the behest of a group of countries led by Germany, who criticised the commission’s proposals as too lax.Countries with debt ratios above 90 per cent of GDP will be required to cut excess debt by one percentage point per year over the duration of their national spending plan. That target is halved for countries with debt ratios above 60 per cent but below 90 per cent of GDP. There are additional budget targets placed on countries with deficits above 3 per cent and debt-to-GDP ratios above 60 per cent. These require them to aim to cut deficits to 1.5 per cent of GDP with annual curbs to spending.Sanctions are strengthened under the deal, with countries missing spending plan targets falling into a so-called excessive deficit procedure, which would require them to reduce spending by 0.5 per cent of GDP per year. The commission has already said that a large number of draft budget plans for 2024 do not comply with the required thresholds and will be sanctioned after EU elections.But a last-minute concession won by France ensures that countries subject to such a procedure will be able to discount debt interest costs in the period 2025-2027, effectively reducing the required spending curbs.“For the first time in 30 years, this stability and growth pact recognises the importance of investment,” French finance minister Bruno Le Maire said on X.Giancarlo Giorgetti, Italy finance minister, had threatened to veto the proposals but ultimately told his colleagues he would relent “in the spirit of compromise”, according to people briefed on the discussions.Some experts said that the reform falls short of its original objective to simplify the rules and ensure more consistent enforcement.“The impression is that countries such as France and Italy have accepted some commitment that would not be binding on them in the short term, in the conviction that it will never be applied,” said Lucio Pench, the author of the commission’s original proposal, now a non-resident fellow with think-tank Bruegel.The political agreement reached by ministers will now form the basis of negotiations with the European parliament, whose position on the rules is more lenient. More